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Is there a difference between a silent partner and an investor?


Is there a difference between a silent partner and an investor?

Silent Partner: Financial Definition
An investor who does not have any management responsibilities but provides capital and shares liability for any losses experienced by the entity.

Silent partners are liable for in any losses up to the amount of their invested capital and participate in any tax and cash flow benefits.

Also known as a "sleeping partner."

See also: Limited Partnership - LP, Master Limited Partnership - MLP, Partnership

legal definition
silent partner n. a non-legal term for an investor who puts money into a business, takes no part in management, and is often unknown to customers. A "limited partner," who is prohibited from taking part in management and has no liability for debts beyond his/her investment, is a true silent partner.

However, without a limited partnership agreement, a silent partner is responsible for the debts of the partnership as a general partner. (See: general partner, limited partnership, partner)

These are not corporations and the term investment herein used to describe a silent partner is partnership capital.

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